D.A. Davidson1 conducted a study of just over 1,000 participants to find out how they felt financially and whether the pandemic made it worse. The respondents, generally speaking, were not satisfied with their financial knowledge.
In fact, just 16% of those surveyed gave themselves an “A” grade, while 50% gave themselves a C or lower.
With the understanding that self-reported skills are typically inflated, the likelihood is that even more of your students do not have the financial knowledge they need.
In terms of how they handled the pandemic, 53% of respondents believed they could have handled their finances better during the pandemic if they had more financial education. That number increases to 71% for Gen Z’ers – those who make up a majority of traditional students.
Less than half the states require high school students to take any type of personal finance course. And schools must offer financial education classes in 24 additional states, but it is not mandatory for students to take the class.
Thankfully, there is a solution. Offering a financial wellness program can provide your students with the financial education they need and want.
Creating a Budget
An EverFi survey2 found that 61% of four-year college students did not create or use a budget and 47% found that keeping track of their money caused them the most financial stress of any financial topic.
However, creating and using a budget can help students navigate uncertain financial times by:
- Helping them determine and continue working toward financial goals: Students with a budget are more likely to stay out of debt, use student loan money wisely, and save money for potential emergencies. With 96.3% of college students reporting having some debt3, the need to learn how to budget is great.
- Feeling less stressed: The EverFi survey found that students were the most financially stressed about finding a job, paying tuition, the cost of books and supplies, having enough money to last the semester, having enough financial aid, keeping track of spending, affording another year of school, student loan debt, managing their bank account, and financial peer pressure. A National Institute of Health study4 found that those using a budget had less stress.
- Being prepared for financial emergencies: Only 40% of college students have an emergency fund5. Using a budget can help students set aside money to handle emergencies like unexpected car repairs or health issues.
- Encourage better financial habits: When using a budget, students become aware of spending habits and patterns that are not aligned with their overall financial goals. Learning to live within a budget can help them develop strong financial habits that will last long after graduation.
How Financial Wellness Programs Help: Most financial wellness programs offer information on the basics of budgeting. You should also look for programs that help students assess their current situation and develop a budget based on their unique issues.
For example, iGrad offers an interactive budgeting course as well as financial and money personality assessments to help students create a budget and stick to it.
Many of your students will be on their own for the first time. While on campus, they will begin receiving credit card applications and may have taken on substantial student loan debt.
The 2021 College Finance Survey6 found that college students have an average of $3,280 in credit card debt, and 37.6% are behind on their payments. Additionally, students graduating today will do so with an average debt of $31,1007.
Without a doubt, debt is a problem for students. Having debt can cause stress, as well as make it difficult to save money and establish a good credit score.
How Financial Wellness Programs Help: When students use a financial wellness program, they will learn about debt management techniques such as:
- Spending within their means
- Paying off the credit card balance each month
- Saving money monthly to create an emergency savings
Enrich, the sister company to iGrad, found that after one year, users of the platform were more likely to pay off their credit cards and less likely to overdraw their bank accounts. Additionally, the average credit score increased by 25.51 points8.
Insurify found that 96% of Americans did not understand their insurance policies9. Though this survey was not aimed at students, student statistics are likely similar.
While traditional students are in school, they are not likely to need extensive information concerning insurance but general information will be helpful when they get their first jobs.
For non-traditional students who have jobs, families, and house payments, understanding different insurance options and when to have them will be very important. These students will want information on life insurance, disability insurance, long-term care insurance, homeowners insurance, auto insurance, and more.
How Financial Wellness Programs Can Help: Participating in a financial wellness program can give students basic information and provide them with the questions they should ask when seeking insurance. iGrad can help with their courses on Understanding Health Insurance and Assessing Your Insurance Needs.
According to GoBankingRates10, forty-four percent of Americans avoid investing because they do not understand the concept. However, for Gen Z, nearly half are already investing. Unfortunately, only one in four feel like they know enough about investing to explain it to a friend11.
How Financial Wellness Programs Can Help: Helping students learn about investing early can help them be more likely to grow wealth and save money in a way that outperforms inflation. Additionally, these students will be more likely to feel comfortable participating in company retirement plans upon graduation.
iGrad’s course, Investing to Build Wealth, teaches the basics to students, while tools such as the Investment Allocation tool and The Millionaire calculator provide visuals for how investments work.
1 - https://www.cnbc.com/2021/04/06/financial-education-would-have-helped-people-manage-money-during-covid.html
2 - https://www.usnews.com/news/blogs/data-mine/2015/04/02/college-students-becoming-less-financially-responsible-study-says
3 - https://wallethub.com/answers/cc/average-credit-card-debt-for-college-students-2140670817
4 - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3828373/
5 - https://thehill.com/changing-america/enrichment/education/561249-40-percent-of-college-students-are-saving-up-for-an/
6 - https://wallethub.com/blog/college-banking-credit-cards/65596
7 - https://educationdata.org/average-student-loan-debt-by-year
8 - https://www.enrich.org/financial-wellness-behavior-change-data-study
9 - https://www.businesswire.com/news/home/20220428005489/en/96-of-American-Drivers-Don’t-Understand-Their-Car-Insura
10 - https://www.gobankingrates.com/investing/americans-feel-they-dont-know-about-investing/
11 - https://www.investopedia.com/financial-literacy-survey-5223919